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CCI case study
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Candy and Chocolate India (CCI): Last Mile Distribution Challenge
Nikhil Joy PGP/16/034
Babita Pegu PGP/16/136
Febin Kovan PGP/16/259
Gurnoor PGP/16/318
Saumarjit Kamwar PGP/16/342
Situational AnalysisYear Relevance
1970 CCI was founded
1980 Diversified into Beverages
2000 Expanded to prepared foods
2007 Reconfigured RIM
Organized Revenue: 6.5 M
CAGR (Revenue) : 12%
Estimated Sales by 2014: 11 BCAGR (Volume) : 6%
Unorganized
35% of India’s Total Confectionery Consumption
CONFECTIONARY MARKET IN INDIA
MARKET PENETRATION
Urban – 75% Rural – 10%
PER CAPITA CONSUMPTION
OF CONFECTIONERY
India 20 gms West 32%
North 28%
South 23%
East 17%
75%
15%
10%
SALESConfec-tioneryPrepared Foods
Situational Analysis
76%
14%10%
DISTRIBUTION OF CONFECTIONERY
PRODUCTSKirana StoresConvenience StoresOthers
15%2
5%
55%
5%
DISTRIBUTION PATTERN2-8 yrs 8-25 yrs25-64 yrs > 64 yrs
PRODUCT GROWTH MARKET SHARE
Chocolate 20% 46%
Sugar Candies 5% 34%
Gums 9% 20%
CONFECTIONERY MARKETCCI’S RECONFIGURED RTM
Exclusive Rural
Penetrate Rural
Markets23% of Sales
Traditional Retail
Focuses on Urban Areas75% of Sales
Modern RetailRetail sector
through hypermarkets, supermarkets7% of Sales
Problem Identification
Identify a Route-to-Market (RTM) which is cost effective, easy to operationalize
and scalable. The RTM objective of increase in Sales, decrease in number of days
inventory and improved Customer Service should also be met.
Alternative 1: Superstockist Model
CCI Superstockist Substockist Wholesaler Retailer Customer
Channel:
Superstockist Model
Price per monopack 1
Retailer(12.5% margin) 0.875
Wholesaler(11% margin) 0.7787
Substockist(5.5% margin) 0.7359
Superstockist(11% margin) 0.6549
CCI's revenues 65%
Pros:• Offers advantages of scalability and
operational flexibility• Sustainable option as there are no
channel conflicts
Cons:• Expansion limited• Requires vast resources and
generates less revenues
Alternative 2: Haats
CCI Superstockist Substockist Wholesaler Haat Customer
Channel:
HaatsBuyer spend / day for FMCG 40Buyer spend / day for confectionary 4Total buyer spend / day on confectionaries 35200
CCI market share 12
Retailer revenues / day 4224
Retailer(12.5% margin) 3696Wholesaler(11% margin) 3289.44Substockist(5.5% margin) 3108.5208Superstockist(11% margin) CCI Revenues/Day 2766.583512
CCI's revenues 65%
Pros:• Weekly markets; 43000 Haats in India• Haats were preferred over rural retail
outlets• Accessible by roads• Single Haat would cater to 20-60
villages• Had 5000-12000 visitors per day
Cons:• Temporary Haats moved from village
to village• How would channel be established
Alternative 3: VansPros:
Mobility from village to village
Widely used in rural markets
Used for creating brand awareness
Cons:
Expensive option as Vans costed Rs.3,500 per day
Only 33% percent of villages had roads; limited scope
Alternative 4: SHGs
CCI Superstockist SHG Retailer Customer
Channel:
SHGs
Price per monopack 1
Retailer(12.5% margin) 0.875
SHG(0.5% margin) 0.8706
Superstockist(11% margin) 0.7748
CCI's revenues 77%
Pros:• Higher Margins for CCI• Personal selling possible• Opportunity for CSR
Cons:• Volume sales would be limited• Limited scope as SHG movement had
not spread evenly across India
Alternative 5: Mobile Traders
CCI Superstockist
Mobile Trader Customer
Channel:
Mobile Traders
Price per monopack 1
Mobile Trader(12.5% margin) 0.8750
Superstockist(11% margin) 0.7787
CCI's revenues 78%
Pros:• Local knowledge• Could sell at Haats and Rural retail
stores• Cost effective• Can penetrate areas without road
connectivity• Prices could be reduced to increase
penetration
Cons:• Lower sales volumes• Can only sell value packs and low
cost confectionary items
Alternative 6: Tie-Up with India PostPros: Cost effective way to reach rural markets Deliver consignments directly to retailers
Cons: Can only be used in conjunction with
Retailers, Mobile Traders etc India post has huge bargaining power Nature of product denied tie-ups
Recommendation Combine alternatives 2 and 5: Haats and
Mobile Traders Mobile Traders would be able to serve
villages with very low connectivity Higher volume sales at Haats would make
up for the low volume of Mobile Trader sales
Local knowledge of Mobile Traders coupled with lower prices would increase rural penetration
Thank You
